題組內容

2. Consider a two-period model with two firms, A and B. In the first period, they simultaneously choose one of two actions, Enter or Don't enter. Entry requires the expenditure of a fixed entry cost of 10. In the second period, whichever firms enter play a pricing game as follows. If no fim enters, the pricing game is trivial and profits are zero. If only o ters, it earns the monopoly profit of 30. If both firms cnter, they engage in competition as in the Bertrand model with homogeneous products

(c) Compare the results from the mixed-strategy Nash equilibrium to the Bertrand Paradox. (6%)